The proposed acquisition of troubled FinBank by First City Monument Bank (FCMB) has suffered a major setback, investigations by the News Agency of Nigeria (NAN) have shown. This followed recent discovery of hidden bad loans and huge debt profile of the troubled bank.
A source at the Securities and Exchange Commission (SEC) told NAN on Tuesday in Lagos that debt issue was responsible for the delay in approving the two months old take-over bid.
The source, who pleaded anonymity, said “Finbank has numerous issues, especially bad loans that need to be addressed”. The source, who declined to provide details of the bad loans, added that the bank had hidden and questionable transactions that must be resolved urgently.
He said stakeholders in the take-over bid, especially SEC, had agreed on finding a lasting solution to the debt overhang in Finbank before the endorsement of the banks’ business combination.
Mr Kenny Aliu, FCMB Group Head, Corporate Communications, said in a telephone interview that things were going according to plans in terms of timing of completing the transaction.
“We like doing things thoroughly. Currently we are going over the final details of the transaction. In our view, the transaction is seamless and everything is on track as far as our relationship with all relevant regulators is concerned. Everything is going on track; there is no cause for concern. We are not aware of any setback. It has not being communicated to us,” he said.
The shareholders of FCMB, had on Sept. 29, approved the bank’s acquisition of Finbank through its subsidiary, FCMB Investments Ltd. The shareholders, also at the court-ordered Extra Ordinary General Meeting (EGM), endorsed the issuance and allotment of the bank’s shares or payment of cash to the shareholders of Finbank.